ces Problem 13-26 Systematic versus Unsystematic Risk [LO3] Consider the following information about Stocks I and II: State of Economy Recession Normal Irrational exuberance Probability of State of- Economy 20 .60 .20 Rate of Return if State Occurs The standard deviation on Stock I's return is deviation on Stock Il's return is stock's systematic risk/beta, Stock Stock I .09 18 12 Stock II -.26 13 46 The market risk premium is 5 percent, and the risk-free rate is 4 percent. (Do not round intermediate calculations. Enter your standard deviation answers as a percent rounded to 2 decimal places, e.g., 32.16. Round your beta answers to 2 decimal places, e.g., 32.16.) percent, and the Stock I beta is percent, and the Stock Il beta is is "riskier". The standard Therefore, based on the

Problem 13.26 Systematic versus Unsystematic Risk [LO3] Consider the following information about Stocks I and II: The market risk premium is 5 percent and the nisk-free rate is 4 percent. (Do not round intermediate colculations. Enter your stondard deviation answers os o percent rounded to 2 decimal ploces, e.g., 32.16. Round your beto onswers to 2 decimal ploces, e.g., 32.16.)